Where to Build a Factory in Thailand?
Foreign investors who are looking to construct a factory in Thailand should be aware of the different possible locations in which a factory can be built. There are primarily three possible locations, in order of suitability:
- Industrial Estates
- Industrial-zoned land outside of industrial estates (“Purple zone”)
- Non-industrial zoned land (“Green Zone”)
Out of those three options, land that is located within an industrial estate is the most suitable location to construct a factory. Normally, an industrial estate will be managed either by the Industrial Estate Authority of Thailand or a private juristic person. Furthermore, such land will be located in purple-zone land and additionally they are located in either Board of Investment Zone 2 or 3, which receive extra promotion. Industrial estates are also normally within a convenient distance from seaports or transportation hubs, which make them ideal locations for factories. Finally, industrial estates are the most convenient location because the industrial estate juristic person will arrange for public water, electricity, a sewage system, and other utilities to be provided for the factory.
The second option is purple-zone land that is located outside of an industrial estate. Since the land is already located in an area zoned for industrial use, the investor will usually face little to no difficulties in being issued a factory construction license, assuming their factory construction plans are according to standard. Furthermore, factories located in such areas are also eligible for BOI Zone 2 or 3 promotion. However, the factory would not receive any of the benefits of being located in an industrial estate. Therefore, the investor setting up the factory will have to take care of such issues such as public utilities and waste management all on their own. However, one benefit of locating outside an industrial zone is if the investor is able to locate purple-zone land located on a highly elevated area since it would make the factory immune from flooding.
The final and least recommended option is for the investor to locate the factory in green-zone land or an area that is not zoned for industrial use. The most serious obstacle is that Thai government regulations will usually limit the size of the factories that can be built in these zones to less than 50 horsepower, such that heavy industrial or medium-heavy industrial activities are not possible. Furthermore, the process to alter green-zone land to the purple-zone is very lengthy and bureaucratic. Townhall meetings are required in order to consider the views of local residents and the zoning change must ultimately be approved by the Cabinet.
Category: Business in Thailand, Thailand BOI
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Siam Legal is an international law firm with experienced lawyers, attorneys, and solicitors both in Thailand law and international law. This Thailand law firm offers comprehensive legal services in Thailand to both local and foreign clients for Litigation such as civil & criminal cases, labor disputes, commercial cases, divorce, adoption, extradition, fraud, and drug cases. Other legal expertise of the law firm varied in cases involving corporate law such as company registration & Thailand BOI, family law, property law, and private investigation.
